Business News/ Economy / Dumping duty unlikely on Indonesian viscose

The Union finance ministry may not impose anti-dumping duty (ADD) on viscose staple fibre (VSF) from Indonesia as it may worsen the shortage of the key raw material for India’s textile industry, two people aware of the development said.

The commerce ministry’s Directorate General of Trade Remedies (DGTR) recommended a duty of $0.512/kg on these imports in December as part of a government initiative to enhance the quality of textiles. However, about a dozen members of Parliament, including those from the ruling party, wrote to finance minister Nirmala Sitharaman recently that it would raise the import price of viscose fibre by as much as 40 per kg.

“DGTR had recommended anti-dumping duty on VSF imports only from Indonesia and not across. We import from two-three countries, including Indonesia, Austria, [and] China. The anti-dumping duty was recommended only in the case of Indonesia as the investigation found a case of injury to the domestic industry," one of the two people cited above said on condition of anonymity.

Dropping the move to impose the duty would be a relief for domestic textile manufacturers, which were facing the prospect of trade disruptions, lower competitiveness, and economic losses.

“The finance ministry takes into consideration the recommendation of DGTR and also the public interest. The finance ministry has not announced the duty, and the period where the decision was expected to come is now over. So, anti-dumping duty on VSF is unlikely. The duty was limited to Indonesia as there was a huge surge," the person added.

The MPs had written to Sitharaman that viscose-blended cotton is the future and forms a critical raw material for the spinning and weaving industry, producing apparel, accessories, and technical textiles. They also pointed to problems with VSF availability.

“In this financial year, the domestic VSF demand was 700,000 tonnes, and the availability was only 540,000 tonnes. This move (proposal of ADD on VSF) could raise the import price of viscose fibre by as much as 40 per kg," they added.

The person cited earlier said the government is focusing on quality, but that does not mean it isn’t looking to maintain availability. “I am not saying no to imports, but sub-standard imports should not be encouraged. But at the same time, assured availability of raw material also needs to be guaranteed," the person added.

The second person cited above said the duty on VSF was recommended amid efforts to improve quality, and it is not expected any more. “The industry understands that there is a need for quality, but the government must realize that our buyers cannot be affected. There is tough competition from Bangladesh and Vietnam, and if buyers get a better deal, they will not source from India. It can’t be quality by force. The government should take an interim step where there may be a voluntary approach to it for a year," the person added.

Queries sent to the commerce, textile and finance ministries remained unanswered at press time.

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Updated: 31 Mar 2023, 12:39 AM IST
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